Banswara Syntex plans capacity expansion worth Rs 40cr

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Banswara Syntex plans capacity expansion worth Rs 40cr

In an interview with CNBC-TV18, RS Toshniwal, CMD, Banswara Syntex, spoke about the company's ambitious plans and the his outlook.

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Banswara Syntex board has approved the company's proposal for expansion of weaving, processing and garmenting capacities and also modernization of its spinning division with a total estimated capex of Rs 40 crores.

In an interview with CNBC-TV18, RS Toshniwal, CMD, Banswara Syntex, spoke about the company's ambitious plans and the his outlook.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Could you talk a bit more about what really are you going to use these sum for and what instrument would you choose to raise these funds?

A: We are going to take all this loan under Technology Upgradation Fund (TUF) and the company has to put in about 20% of the total. We are very easy with our cash flow because it's a 10-year loan and we will be getting the money at interest cost of 7%. We get 4 or 5% depending on spinning, weaving, processing. We also get 25% subsidy on processing machines. Therefore this becomes a good plan to invest through TUF.

Textile companies mostly don't go in for initial public stock offering (IPO) or other methods to invest because they can get money from the government at a concessional rate of 5%.

Q: This Rs 40 crore sum is addition to the Rs 50 crore that you also just raised. What are you going to this total sum for-Rs 110 crore?

A: This will be used in all the sectors. We will expand about 6,000 spindles in spinning; we will be expanding about 48-50 looms in weaving. We will increase processing capability from 28 lakh meters will go to 40 lakh meters. We will be doing garmenting where we will be adding jacket line, one more trouser line.

So it will be used in extending the value addition in all the segments of our manufacturing process.

Q: While your sales have increased nearly by 20% we have seen slippage coming in bottomline. Could you take us through the quarters and what contributed to the dent that we are seeing in the bottomline?

A: The bottomline has become 3.2 times of what we did last year. If last year, we did about Rs 7.95 crore, this year we are doing close to Rs 30.85 crore. This is 3.2 times of what we did last time. The whole year has been very good and the sales have increased by about 15%.

But profits have become much more because basically all costs were kept in control. The power cost has come down. The interest cost because of our liquidity position we were able to use the money more for working capital, so the total interest cost has also come down.

On the whole we have been able to do value added products.